Kissimmee, FL Vacation Rental – Polynesian Islas Resort
Before you start investing in vacation real estate, you want to know your earning potential. It’s easy to feel skeptical when an owner walks up to you and boasts of the six figures he/she made from a vacation home, when you’re grinding it out doing overtime and barely pushing $50k a year. What’s the secret and do dollars immediately start rolling in just because you buy another property?
Like many investments, vacation rental can vary faster than the temperature. There’s a lot of factors that go into exactly how much an investor will make on their purchase, from size and location to quality and amenities. In fact, even identical properties that are in perfect condition next to each other can pull different booking rates and revenue simply because one has a nice view and the other doesn’t.
Guest demands can changes based on time and other factors, so this is what will drive the market. Even little details like a deck can make a huge difference. We’re going to show you why and how these rental performances can vary so greatly based on contextual factors, starting with three of the most popular investing cities: Gatlinburg, Breckenridge and Kissimmee.
HOW MUCH RENTAL INCOME DO TWO-BEDROOM PROPERTIES EARN?
- $52,840 / yr
- 175 nights booked
- $302 avg. nightly rate
- $31,449 / yr
- 210 nights booked
- $150 avg. nightly rate
- $25,505 / yr
- 248 nights booked
- $103 avg. nightly rate
Two bedroom properties are affordable options but they can have vastly different results. In our example from Kissimmee, guests very close to Walt Disney World. An investor can expect to book the property nearly 240 nights in a year at roughly 65% for about 100 bucks per night, which earn you $25,000 of rental income taking price adjustments into account for both high season and shoulder seasons.
While it might be the lowest income in this comparison you must remember that it’s also the most cost-effective, at only $195,000. Since you aren’t spending as much money initially as you would in Gatlinburg and Breckenridge, you aren’t pressed to make as much income to take care of the costs of your investment.
Let’s take a look at a decent-sized log cabin in Sevierville which costs about $367,000. It’s a hefty price tag compared to where we came from, but it also is likely to bring in $31,449 per year, which helps to offset those costs a bit.
On the other hand, the beautiful condo with two bathrooms and bedrooms in Breckenridge will make the most money of all three in our comparison: $52,840 per year. Although this number is quite enticing it comes at a substantial price. Redfin estimates the condo’s value at $784,941. Because it’s such a large investment, the higher revenue reflects that fact that it costs much more to break even on this property.
We’ll see similar trends as we look at three and four bedroom rentals.
Earnings for Rentals with Four Bedrooms
- $93,579 / yr
- 127 nights booked
- $737 avg. nightly rate
- $63,310 / yr
- 209 nights booked
- $302 avg. nightly rate
- $37,065 / yr
- 268 nights booked
- $138 avg. nightly rate
These properties are made for larger parties, so they can command higher nightly rates when booking. They can also incite sticker shock for investors based on location.
We’ll start at top of the spectrum, with a beautiful four-bedroom cabin in Breckenridge that will yield $93,579 each year. That’s an attractive passive income, but at $1.2 million, this luxury log cabin with mountain views is most likely not in the budget for the average vacation home owner.
A similar sized cabin in Gatlinburg at half the price, at $550,000 and will earn $63,310 per year in rentals based over 200 booked nights. If your marketing is top-notch, you could earn even higher. The previous investors of this address brought in more than $70,000 a year, another example of just how variable the industry can be.
Last but not least, we take a look at the Kissimmee home, a stone’s throw from Disney, which usually generates $37,065 a year in revenue. While this might seem lackluster compared to the properties preceding it, this number is very favorable in comparison to the typical revenue zone for investors.
Zillow estimates this property would go for roughly $300,000.
WHAT CAN LUXURY PROPERTIES EARN?
- $313,036 / yr
- 159 nights booked
- $1,969 avg. nightly rate
- $165,400 / yr
- 209 nights booked
- $791 avg. nightly rate
- $50,045 / yr
- 218 nights booked
- $230 avg. nightly rate
If these numbers and examples feel like they don’t matter, just remember that a lot of variable exist in the vacation rental market. Looking at luxury rentals, the home in Breckenridge remains the top potential earner at a whopping $313,036 each year, but the large home nestled near Breckenridge Ski Resort sports a flashy $12.29 million price tag. Investors can look forward to 159 nights booked per year for roughly $1,969 per night.
Don’t fret, we know that most investors don’t have a spare $12 million to drop on an investment property. This comparison shows that a six-bedroom luxury home can still be a possibility for you in a more cost-effective market.
A six-bedroom luxury cabin near Pigeon Forge on a swanky 6.3 acre estate would make a cool $165,400 per year, against its $1.5 million cost, while an investor could spend a fraction of that–$455,000– for a six-bedroom Kissimmee home that earns $50,045 per year.
As you can see, $50,000-$300,000 a year is more than a sizable range for investors to expect for similar level properties. Price and income variation can be quite vast for the same properties depending on location and rental trends from one place to the next.
As you plan your next investment and attempt to estimate your costs and revenue, assess the amenities, location, and when assessing performance figures. Vacation rental is a very lucrative business in many ways, yet every investor must be honest about the earning potential for their respective home and avoid relying on wishful numbers.
Even investors who are able to purchase a sprawling rental near Walt Disney World, may not pull in over $300,000 in rental income, but you don’t need that much revenue to be successful.
If your property is a large vacation rental in Kissimmee, making the area average of $42,276, will comfortably cover your expenses and earn a profit too.
INTERESTED IN SIZING UP YOUR PROPERTY PERFORMANCE?
B&B Fusion is your trusted source for vacation rental management, to help you market, promote and maintain your property for years to come.